Washington calls community banker

Firsthand knowledge of community banking will be a plus in working with Washington officials, says Rebeca Romero Rainey.

Two years ago, when she was 39, Rebeca Romero Rainey could have entered the Banking Exchange 20 Under 40 Awards contest if it had existed then. It’s hard to imagine she wouldn’t have been among the 20 people recognized based on her impressive credentials.

The new president and CEO of the Independent Community Bankers of America became president and CEO of Centinel Bank of Taos, N.Mex., in 1999 at the age of 22. At the time, she was the youngest bank CEO in the country at an age when many young people are driving their parents crazy as they try figure out what they’re going to do with their lives.

The bank had been founded by her grandfather, Eliu Romero, in 1969, and Romero Rainey, who worked there as a teller at 15, helped it grow and thrive over her nearly 20 years at the bank. She served as chairman of the New Mexico Bankers Association and rose to be chairman of ICBA for the 2016-17 year before accepting the association’s offer to replace Camden Fine as CEO when he retired effective May 1.

When we interviewed Romero Rainey in the ICBA offices on May 21, the day before the House passed the regulatory relief bill (S. 2155), she said the only negative about taking the association post was having to leave the family bank.

“At the end of the day,” she said, “it came back to my deep-rooted belief in the community banking industry and its business model, and the calling to serve the industry beyond the walls of Centinel Bank and beyond the community of Taos.”

Romero Rainey and her husband, John, and their two daughters moved to Washington last August so the girls could start school in Washington. She officially joined ICBA in January.

She, of course, already knew the staff well and had met many key players in the nation’s capitol, including both President Obama and President Trump. Asked about developing the connections so necessary to any Washington trade group executive, Romero Rainey described it as not much different from the relationship building she’d been doing as a bank CEO.

“It’s taking the time to sit face-to-face and get to know the folks that are in the positions we’re working with—finding the common ground where we can work together.” Lots of “meet and greets” in other words, plus speaking at different events locally.

She believes her firsthand knowledge of the impact on community banks of regulation (BSA and mortgage lending rules were especially difficult, she says) and of having seen the opportunities for innovation in the fintech era will be a plus in her new role.

In the following edited dialogue, Romero Rainey shares her views on the future of community banking, bringing young people into banking, innovation and technology, and the further work needed to achieve proportionate regulation—a level playing field.

Q1.As a young person, you found banking attractive. How do you make it appealing to other young people?

Romero Rainey: A challenge facing the industry right now is succession planning and so more younger people of all backgrounds is what this industry needs. A lot of what I’m focusing on is helping to build the next generation of community bankers and looking for opportunities to engage those new voices, whether they are women or men, to really consider this industry as a career.

I’m also encouraging existing bank leaders to look to this next generation as the future leaders for their organizations.

Part of the process is how we tell the story of community banking—getting more young people to realize that the role of a community banker often means wearing multiple hats within an organization, and that it is an opportunity to be the lifeblood of economic development in their hometown. If we can do that, I think we are a logical fit for the millennial generation.

Another piece is creating networking opportunities for this next generation to come together and think about what’s possible within their organizations and within their communities. We’ve had an event for several years for emerging leaders called Lead Forward, plus our Community Banker University.

As we focus on management succession, we should also think about ownership succession, especially with privately owned organizations. If a family has been engaged in that bank, is it prepared and is it willing to take on the challenges and opportunities as our industry grows and moves into the future?

Preparing that next generation of owners and engaging them within the industry, I think, is going to be just as important as the succession within management groups.

Q2.Innovation also may help attract younger people. How do you see your role in helping to spur innovation?

Romero Rainey: One of the things that I love about our industry is the uniqueness of each organization and what they’re trying to do to serve their individual communities. That may be at varying levels of technological capability.

The opportunity for community banks is to partner with fintech firms. It’s a way for them to meet their customers’ needs, to be more efficient in their operations, and to be able to continue to grow—but all in ways that are unique to what that bank is trying to do. Right now, with the evolution of fintech providers, there are a variety of different options.

And so at ICBA, we’re trying to look for ways to connect fintechs with the banks.

We created a chief innovation officer position a year ago, and really, the essence of the role is trying find ways to partner community banks and fintechs. About two months ago, we released a FinTech Strategy Road Map that covers best practices, how to engage, how to evaluate, how to meet the regulatory guidelines, and more.

This is also where the next generation of bankers comes into play. They have the familiarity and they have the desire to leverage these technologies and bring them into the organization. That way, banks can stick to the core of the business model—relationship banking—but be able to offer these various technological options and make the practices more efficient behind the scenes as well.

Q3.Community banks just saw the passage of the Regulatory Relief Act—a big win—but they remain heavily regulated and face stiff competition from big banks and nonbanks. What do community banks need to do to thrive?

Romero Rainey: S. 2155 is a landmark law that lifts many regulatory burdens, including changes to the qualified mortgage rules, examination cycles, call reporting, and HMDA reporting, among others, plus it provided capital relief. But we look at this bill as one step. There will be many more steps to come in our quest for a proportionate regulatory environment and a level playing field for community banks.

There’s still much work to be done. For example, there is modernization of AML and BSA reporting requirements and thresholds. Then there is ensuring accountability at the CFPB—or the BCFP as we’re now supposed to call it [Bureau of Consumer Financial Protection, the actual name of the agency in the Dodd-Frank Act]. Unlevel competition from credit unions and the Farm Credit System are also big issues, and cybersecurity and data security will continue to be top priorities.

Banker engagement in the advocacy process will continue to be critical to achieving proportionate regulatory relief.

Q4.Regarding credit unions, in their membership marketing materials, they openly say, “Anyone can join.” Which is more likely: reining in their fields of membership or changing the credit union tax exemption?

Romero Rainey: There have been challenges made to expanded fields of membership, but the biggest part of it is enforcement. I was looking at a credit union website the other day, and it was saying, “There are over 5,000 ways you can become a member.” What is that?

Their regulator is more of an industry cheerleader as opposed to a proponent of following the law. All we’re asking for is to level the playing field. If you want to be a bank, if you want to have this open field of membership, let’s pay taxes the same way banks do.

If their desire is to get into business lending and to be able to expand their field of membership, things that the tax exemption was structured to limit in order to focus credit unions on serving underserved populations, then, yes, let’s remove those tax exemptions if, in fact, you’re going beyond what the statute originally called for. It’s intuitive. It’s a different business that they’re operating today—especially for the largest of the credit unions.

Q5.A two-part question: Will the regulatory relief legislation loosen up the de novo market, and, if so, will the startups be traditional banks—perhaps even family-owned—or niche banks or banks built to sell?

Romero Rainey: I’m optimistic that the new law is one more step in this process of creating an environment that is more favorable for de novo applications and charters. I envision that we’ll continue to see a little bit of all of what you describe as we move forward. Again, it depends on what the needs are within that individual community.

As we see the need and desire for a local ownership group, a local lender, that is certainly what has spurred several of the applications up to this point, similar to my bank’s story so many years ago. There is a need for someone that understands local businesses and the dynamics of the local economy and can respond accordingly. For that model to succeed for multiple generations would be great, but I think the new law is the first step.

Q6.Related question: Do you see the pace of consolidation slowing as a result of regulatory relief or other factors?

Romero Rainey: I think we can see some slowing. But I also think we will continue to see some level of consolidation. But again, what we here at ICBA are trying to do is create a proportionate environment so that those who want to operate a community bank can continue to do so and not have a disproportionate regulatory burden that drives further consolidation.

There will always be economic factors at work, but let’s think about the business model and the regulatory environment in which we operate and limit that impact in terms of the consolidation decisions that are made.

Sometimes it is sad news when we hear that bankers who have done great things in their communities announce a merger. For me, that is another motivator to say, “How do we stem this tide? How do we not lose these assets within the community banking industry and ensure that the local needs of communities are met?”

Q7.You’ve only been ICBA head for a few weeks, but can you comment on what’s similar and what’s different about being CEO of a bank versus CEO of a trade association?

Romero Rainey: For me, the similarities are quite interesting. In my bank, I was serving my customers. The bank was providing the tools and resources—albeit in the form of capital or deposit products—to help local businesses thrive or to help people build their house or to build for their retirement or their future.

Obviously here, we’re serving community bank members. With each one of them, we’re providing the tools and resources to help their institutions thrive. So it’s all this concept of helping to provide, collaborate, and network to build for a successful future.

More personally, being a community bank CEO, you are always “on.” That could be when I was at my girls’ sporting events or in line at the grocery store when somebody would have a question or an idea they wanted to explore with you or a need that had to be resolved immediately.

It’s the same thing here in Washington, where we’re working in an environment where Congress is always on, and where the regulators are always on. So you have to be available and always on to be able to respond and meet those needs. Those are the areas that I’ve found to be very similar.

As far as different? The only thing that comes to mind is that the offices here aren’t as loud as the bank lobby is. In a bank lobby, you have lots of customer traffic in and out.

But in both cases, the job is a calling. It is good work to be doing. And when you have a mission to serve, I’ve found that as long as you enjoy what you do and see the impact at the end of the day, you can do the long hours or long nights forever.